This new change will help you get approved for a mortgage if you have any delinquent, federal student loans. So I ran across this post on Reddit which I always tend to learn a ton on, and this person said federal student loans are no longer being reported to CAIVRS.
If you're not familiar with CAIVRS. Basically any delinquent, federal debt is put onto a warning list. Basically, you can't get a new government loan like FHA, VA, or USDA. If you're on the CAIVRS list. So any federal delinquent student loan debt, it's put on that list.
If you had to apply for an FHA loan and they see it, you won't be able to qualify for that loan unless you're taken out of CAIVRS Getting off of the CAIVRS list includes either paying off the loan or getting on a payment plan to bring it back.
So here's the Reddit post. This person says, here's my story: On July 15th, I settle in my new house, and the following week, my wife and I are welcoming up our first child in mid-June. My lender pulls out the CAIVRS report and sees that I have a delinquent federal student loan. My mortgage is dead in the water at that point, unless I can find a way to clear my name from CAIVRS. So they go on to talk about how they called did a bunch of calling to figure out how to get out of this.
So instead of having to pay it off, they found out there was actually a change that was passed that actually clears anyone who has delinquent student loan debt from the CAIVRS list. And as I was reading through this, I was like, I haven't heard about this and no one else is really talking about it, and so I dug through a little bit.
Here's a tweet from the Secretary of Education talking about this extension that they have on student loan repayment will also include a fresh start, eliminating the impact of delinquency and default for all borrowers.
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So anybody who is in this situation, was on the CAIVRS report because they had delinquent or defaulted student loans. That's now wiped clean. And then when payments resume, the hope is that if those people can make those payments, they will be off of CAIVRS obviously. If they don't make payments in the future, then they will be put back on the CAIVRS system.
But this takes a lot of people out of having to pay either the full amount or have a settlement or consolidation or a payment plan to get their loans at default. So now you'll be able to purchase a home with a government loan, like FHA, VA, or USDA without needing to get off of the CAIVRS list because you're automatically off.
According to the Department of Education's website, they explain that this includes allowing all borrowers with paused loans to receive. A fresh start on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing. This is amazing because I did not know that this happened and this was on April 6th and nobody here is really talking about it. Other than the extended pause, this little bit got slipped in under the radar a little bit.
Again, this walks you through CAIVRS a little bit, but basically, to get out of delinquency, you're either going into a repayment plan or paying the amount off in full. This change is now going to allow you to qualify for a government loan like FHA, VA, or USDA with defaulted federal student loans. You have always been able to get a conventional loan with defaulted, federal student loans. But government loans pull the CAIVRS report. So this is gonna be super helpful.
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